Sponsored by ERP for Small Businesses A Buyer’s Guide ERP for Small Businesses: A Buyer’s Guide Table of Contents 5 Preface by Sidney Hill, Principal, SJR Communications 6 ERP for Small Businesses: A Buyer’s Guide by Gabriel Gheorghiu and Aleksey Osintsev, TEC analysts Spotlight on SaaS 27 Thought Leadership from SAP How Small and Midsize Businesses Reap Benefits by Using Software as a Service 31 SAP Case Study Tam Ceramics SAP® Solution Perfect Fit for Post-Acquisition Ceramics Specialist 33 NetSuite Case Study NetSuite: Distribution Video & Audio 37 NetSuite Case Study NetSuite : Cartridge World Spotlight on Manufacturing and Distribution 42 Thought Leadership from Sage Sage ERP Solutions 45 Pronto Software Case Study Pronto Software | Success never tasted so good 49 Pronto Software Case Study Parksite | Laying a growth foundation with Pronto Software 53 ABAS Case Study J. Schmalz GmbH user report 58 ABAS Case Study User Report: Weinig Group 61 SYSPRO Case Study SYSPRO Case Study: Daprano & Company Spotlight on Financials 65 Corefino Case Study Corefino Case Study—CHPCC 69 Intacct Case Study OpSource Improves Global Business Management and Streamlines Revenue Recognition with Intacct 73 Sage Case Study Sage Accpac Extended Enterprise Suite Enables Island Lake Resort to Grow Despite Stiff Competition 77 Sage Case Study Sage MAS 90 is the Perfect Profile for Digital Signal Corporation 82 Vendor Directory Preface by Sidney Hill, Principal, SJR Communications The nature of business has changed dramatically in the Internet On the surface, that’s a difficult question for small business age. And small businesses may be feeling the greatest impact. owners because ERP systems historically have been associated with large organizations that fill large number of orders for With advances in technology breaking down geographic numerous customers. There also is a widespread perception barriers, even companies with just a few million dollars in that installing and maintaining an ERP system is a time- annual revenue find themselves operating on a global scale, consuming, expensive undertaking—and much too complex with customers, suppliers, and other business partners located for any small business. all over the world. Fortunately, however, technological advances have transformed Most small business owners welcome these changes because the nature of ERP as well. they have given them access to markets that previously were open only to the largest corporations. At the same time, Numerous vendors now offer ERP systems that are easy to install, however, small business owners are starting to realize that use, and maintain, putting them well within the reach—from being on equal footing with large enterprises when it comes both a technical and financial standpoint—of small enterprises. to access to markets also forces them to deal with many of the same problems that confront larger organizations. These systems give small businesses the tools they need to compete in the global marketplace without busting their For instance, the cost of shipping and receiving goods across budgets. borders must be accounted for when devising business strategies. In addition, complying with environmental As more small business owners realize that Word documents regulations, tax laws, and other policies in multiple countries and Excel spreadsheets are not sufficient for managing a increases the complexity of running a business. twenty-first-century enterprise, they no doubt will want to explore this new generation of ERP systems. Using this Buyer’s Global competition also is forcing companies—both large and Guide from Technology Evaluation Centers would be a good small—to do more to meet the needs of individual customers. first step on that journey. It provides a basis for tackling all the For manufacturing companies, this means building and issues that come with evaluating and selecting the right ERP managing more products, as well as maintaining better records system for a particular business. of customer preferences when it comes to products, methods Guide Buyer’s A - Businesses Small for ERP of delivery, and issues related to service. If you’re a small business owner considering ERP, you undoubtedly have numerous questions. Should you choose an Small businesses that count larger enterprises as customers on-premise, on-demand, or open-source system? Should you often must also adopt a specific form of information manage the selection and implementation process yourself, or technology (such as electronic data interchange [EDI]), connect rely on outside consultants? to a particular supplier network, or transmit documents in exact formats. These questions—and many others—are addressed in this guide. Open it, and begin the process of improving the way you With all these factors to consider, small business owners run your business. increasingly have to confront one essential question: Do we need an enterprise resource planning (ERP) system? 5 ERP for Small Businesses: A Buyer’s Guide by Gabriel Gheorghiu and Aleksey Osintsev, TEC analysts This guide is intended for owners and managers of small • The majority of IT-related decisions are prepared and companies, and anyone interested in knowing more about made by the top managers or business owners, who enterprise resource planning (ERP) systems. are usually not professionals in complex corporate informational systems selection, deployment, and There are many definitions of “small business,” but most of exploitation. them are similar—usually differing only in annual revenue levels and employee numbers. These definitions may differ • Employee knowledge of ERP is minimal or based only on from one information source to another, and largely depend experience with legacy systems. on the objectives of a grouping process. The revenue and employee parameters tend to be higher in the United States The small-business demand for corporate information (US) but lower in Europe or Asia, and also depend on industry systems grows every year, as evidenced by the increased type and other factors. For the purposes of this guide, we number of small companies selecting and implementing ERP categorize small businesses in the following way (all dollar systems. This market segment is too significant to be ignored, figures expressed as USD): and software vendors have certainly responded. Unlike ten years ago, they now offer a considerable number of systems • Micro businesses: 1 to 20 employees, with revenues of all types and price points designed or adjusted for small under $5 million businesses. To understand how big the market is, here are • Small businesses: 20 to 200 employees, with revenues some US statistics (source: United States Small Business from $5 to 50 million Administration, The Small Business Economy; A Report to the • Small to medium businesses: 200 to 500 employees, President 2009): out of over 6.1 million employers, 5.9 million with revenues of $50 million and over (or 96 percent) are companies that employ less than 100 permanent employees. More than 36 percent of all US full- These three categories of small business typically share the time workers are small business employees. We observe following characteristics: similar proportions in almost every country—and this curve seems to be rising yearly. • They have no full-time in-house IT staff, or they have only a few people tasked with hardware and network On the other hand, the number of small businesses currently maintenance and office applications support. using an integrated computer-based management system is not that high. The majority of small businesses use non- centralized manual or spreadsheet-based procedures, or use legacy systems that often do not reflect a challenging reality ERP for Small Businesses - A Buyer’s Guide Buyer’s A - Businesses Small for ERP and in fact retard a company’s development and growth. 6 The trends and market tendencies described in this guide are Each category certainly has its own weaknesses and related to small business IT products that have existed for at strengths, but either can be appropriate for a small business. least a few years. They’ve been proven and put to the test in Also, during the last few years, the distinction between the context of the global economic downturn. Indeed, many the categories has become blurrier: large-scale traditional managers and business owners see this challenging time as systems have become much more affordable (without a good opportunity to rethink and remodel their businesses, significant functionality loss), while at the same time, vendors and prepare for forthcoming growth and demand escalation. of small business systems have extended and developed their packages considerably. ERP Systems for Small In terms of the ERP software selection process, small businesses have their own requirements and unique Business: Do They Actually characteristics: Help? • They are usually more sensitive to economic uncertainty Small businesses face the some of the same business and to the ramifications of flawed business decisions, challenges as medium and larger companies, including and therefore need to make more careful investment pressure from competitors; global economic volatility; decisions. the need to attract and retain new customers; and the need to reduce expenses and increase profitability. Small • Fewer financial resources are available for IT projects, as organizations also have additional constraints, including access to financing is more problematic. limited access to financial resources; higher day-to-day